nep-cna New Economics Papers
on China
Issue of 2023‒03‒06
seven papers chosen by
Zheng Fang
Ohio State University

  1. Asymmetries in the oil market: Accounting for the growing role of China through quantile regressions By Valérie Mignon; Jamel Saadaoui
  2. How the PBoC´s new MLF affects the yield curve By Makram El-Shagi; Lunan Jiang
  3. Pain or Anxiety? The Health Consequences of Rising Robot Adoption in China By Qiren Liu; Sen Luo; Robert Seamans
  4. Does Economic Policy Uncertainty Encourage Gambling? Evidence from the Chinese Welfare Lottery Market By Can Xu; Andreas Steiner; Jakob de Haan
  5. The Value of a Green Card in the U.S. Marriage Market: A Tale of Chain Migration? By Bansak, Cynthia; Dziadula, Eva; Zavodny, Madeline
  6. Investing the factors affecting green bond investments in China: Cases for Beijing and Shenzhen By Zenno, Yoshihiro; Aruga, Kentaka
  7. Rare Earth Elements: A game between China and the rest of the world By Behnaz Minooei Fard; Willi Semmler; Giovanni Di Bartolomeo

  1. By: Valérie Mignon; Jamel Saadaoui
    Abstract: This paper investigates the role of political tensions between the US and China and global market forces in explaining oil price fluctuations. To this end, we rely on quantile regressions—quantile autoregressive distributed lag (QARDL) error-correction model—to account for possible asymmetric effects of those determinants, depending on both the level of oil prices and the period. Our results show evidence of a quantile-dependent long-term relationship between oil prices and their determinants over the 1958-2022 period, with an exacerbated effect of US-China political tensions in times of high oil prices. Furthermore, this quantile-dependent cointegrating relationship is time-varying across quantiles, highlighting the increased role played by China in the oil market since the mid-2000s.
    Keywords: Oil prices, political tensions, quantile regressions
    JEL: Q41 F51 C22
    Date: 2023
  2. By: Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Lunan Jiang (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)
    Abstract: In this paper, we assess the impact of the Medium-term Lending Facility (MLF), an instrument recently introduced by the People's Bank of China (PBoC), on treasury and corporate bond yields. This instrument and, more specifically, the transmission of its use through treasury bond yields to corporate bond yields plays a major role in the more market-based policy the PBoC envisions for the future. Using a semi-parametric local projection framework, we show that the mechanism is already fairly effective, allowing the PBoC to manipulate the entire yield curve.
    Keywords: Monetary policy; yield curves; MLF; Chinese bond market
    JEL: E52 G12 E44
    Date: 2023–02
  3. By: Qiren Liu; Sen Luo; Robert Seamans
    Abstract: The rising adoption of industrial robots is radically changing the role of workers in the production process. Robots can be used for some of the more physically demanding and dangerous production work, thus reducing the possibility of worker injury. On the other hand, robots may replace workers, potentially increasing worker anxiety about their job safety. In this paper, we investigate how individual physical health and mental health outcomes vary with local exposure to robots for manufacturing workers in China. We find a link between robot exposure and better physical health of workers, particularly for younger workers and those with less education. However, we also find that robot exposure is associated with more mental stress for Chinese workers, particularly older and less educated workers.
    Date: 2023–01
  4. By: Can Xu; Andreas Steiner; Jakob de Haan
    Abstract: This paper investigates the effect of economic policy uncertainty (EPU) on gambling activity in China. Based on a theoretical model, we hypothesize that EPU increases the demand for hope which raises the willingness to pay for lottery tickets, resulting in higher lottery sales. We estimate a Panel Autoregressive Distributed Lag model with an Error-Correction form using data on lottery sales in Chinese provinces to estimate the short- and long-run effect of EPU on gambling. Our results suggest that EPU has a significant positive effect on gambling in the short run. In addition, we find that this positive effect is less persistent if the EPU proxy is based on economic policy reports in national newspapers than when the EPU measure is derived from local newspaper reports. This may be explained by the different thematic focus and the different degrees of media censorship of national and local newspapers.
    Keywords: economic policy uncertainty, household behaviour under uncertainty, gambling behaviour, welfare lottery, China
    JEL: D12 D81 D91 G41 L83
    Date: 2023
  5. By: Bansak, Cynthia (St. Lawrence University); Dziadula, Eva (University of Notre Dame); Zavodny, Madeline (University of North Florida)
    Abstract: This study examines the impact of having a clear path to lawful permanent resident status, or a "green card, " and naturalized citizenship on marital status and spousal characteristics among Chinese immigrants in the United States. A series of U.S. policy changes in the early 1990s made all mainland Chinese immigrants already present in the country eligible for a green card. We examine the effect of those policy changes on Chinese immigrants' marriage market outcomes relative to other East Asian immigrants. Using 1990 and 2000 U.S. Census data, we find that the share of Chinese immigrants who are married increased after they became automatically eligible for a green card. In particular, highly educated Chinese immigrants became relatively more likely to be married with a spouse living with them and relatively less likely to be married with a spouse living elsewhere. This pattern suggests that some Chinese spouses immigrated after their husband or wife received legal status, or spousal chain migration occurred. We also find that highly educated Chinese immigrants benefited in the marriage market in terms of spousal education and earnings, but less-educated Chinese immigrants did not. Meanwhile, less-educated Chinese-born women became relatively more likely to marry a U.S. native.
    Keywords: immigration, marriage markets, assortative matching, legal status, China
    JEL: J12 J15 K37
    Date: 2023–01
  6. By: Zenno, Yoshihiro; Aruga, Kentaka
    Abstract: We conducted a survey on institutional investors in Beijing and Shenzhen to analyze the factors affecting green bond (GB) investing in China, such as credit rating, GB issuer, fund use, liquidity, redemption term, certification label, and type of currency. We then compared the results for Beijing and Shenzhen, including factors that affected greenium and the two cities’ willingness to pay (WTP). Using a double-bounded dichotomous choice contingent valuation method, we find that higher credit ratings tend to increase Beijing investors’ WTP and that the use of GB proceeds affects Shenzhen investors’ WTP. We also find that investors place importance on the type of currency, length of redemption term, and liquidity when investing in GB, while the certification label does not have an impact on WTP. The WTP for GB was higher among Shenzhen investors than among Beijing investors. The government, financial regulators, and issuers looking to enhance the design of GBs and grow their market share in China would all benefit from the study's findings.
    Keywords: green bonds, greenium, willingness to pay, credit rating, China, Renminbi
    JEL: D0 F64 G1
    Date: 2023–02–02
  7. By: Behnaz Minooei Fard; Willi Semmler; Giovanni Di Bartolomeo
    Abstract: The economics of rare earth elements (REEs) has become a critical issue due to the growing demand for these crucial materials in the transition to renewable energies. The monopolistic structure of the REE market dominated by China and its unstable supply of REEs has raised concerns globally about potential supply chain disruptions. With the largest REE reserves and refining capacity, China exerts market power, causing supply chain problems and price volatility. However, China's growing consumption of REEs may exceed its domestic production and lose its control over the supply since other countries move into the market. This paper uses a game-theoretic stylization to examine competition between China and the rest of the world (ROW). We investigate how China uses a limit-pricing mechanism to prevent the entrance of fringe firms from the ROW and show how the ROW is limited to quantity adjustments. We also examine the market's transformation from a monopoly to a foreseeable duopoly. The focus is on the supply side of the market, the resource extraction by China and the ROW, and the depletion of the discovered resources. Additionally, we assess the role of the impact of marginal costs and supporting policies on these dynamics. Our model variants are solved numerically using the moving-horizon strategy in differential games provided by the non-linear model predictive control (NMPC) technique, allowing us to predict the outcome of the interaction between China and the ROW and the impact of their decision-making.
    Keywords: Rare earth elements; differential games; non-linear model predictive control
    JEL: C61 C7 Q3
    Date: 2023–02

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